AI Takeaway
Lockheed Martin's Q1 FY2026 revenue was nearly flat at $18.0B (+0.3% YoY), but profitability declined sharply with net income falling 13.1% to $1.49B and operating cash flow collapsing 84.4% to $220M, driven by rising costs and higher cost of revenue.
Revenue
$18.02B
++0.32% YoY
EPS (Basic)
$6.47
-11.37% YoY
Gross Margin
11.5%
-1.40% YoY
Operating Income
$2.06B
-13.03% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue grew only 0.3% YoY to $18.02B in Q1 FY2026 versus $17.96B in Q1 FY2025, suggesting that while defense demand remains robust, top-line growth has plateaued, likely reflecting program timing and delivery schedules.
Source: Source: 10-Q Income Statement, Q1 FY2026
Cost of revenue rose 1.9% YoY to $15.94B while revenue was nearly flat, compressing gross margin by approximately 140 basis points to 11.5% from 12.9%. This indicates meaningful cost inflation or unfavorable program mix impacting profitability.
Source: Source: 10-Q Income Statement, Q1 FY2026
Operating income fell 13.0% YoY to $2.06B and net income dropped 13.1% to $1.49B, reflecting the combined impact of higher costs and potentially increased interest expense on the growing long-term debt load of $20.53B.
Source: Source: 10-Q Income Statement & Balance Sheet, Q1 FY2026
2 more insights available
Upgrade to unlockOperating cash flow fell 84.4% YoY to $220M in Q1 FY2026, a dramatic decline that raises questions about working capital management and the sustainability of capital returns. If this trend persists, it could constrain dividend payments, debt service, and future investments.
Source: Source: 10-Q Cash Flow Statement, Q1 FY2026
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $6.44 versus the $6.79 analyst consensus — a -5.2% miss for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $18.02B | $17.96B | +0.32% |
Cost of Revenue | $15.94B | $15.64B | +1.94% |
Gross Profit | $2.08B | $2.32B | -10.55% |
Operating Income | $2.06B | $2.37B | -13.03% |
Net Income | $1.49B | $1.71B | -13.08% |
EPS (Basic) | $6.47 | $7.30 | -11.37% |
EPS (Diluted) | $6.44 | $7.28 | -11.54% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $59.24B | $56.67B | +4.53% |
Current Assets | $25.08B | $22.8B | +10.00% |
Total Liabilities | $51.75B | $49.99B | +3.53% |
Current Liabilities | $22.09B | $21.19B | +4.26% |
Stockholders' Equity | $7.49B | $6.68B | +12.06% |
Cash & Equivalents | $1.89B | $1.8B | +5.05% |
Long-Term Debt | $20.53B | $18.66B | +10.01% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $220M | $1.41B | -84.39% |
Investing Cash Flow | $-541M | $-430M | -25.81% |
Financing Cash Flow | $-1.91B | $-1.66B | -14.89% |
Share Buybacks | $0 | $750M | -100.00% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 11.5% | 12.9% | -1.40% |
Operating Margin | 11.4% | 13.2% | -1.76% |
Net Margin | 8.3% | — | — |
ROE | 19.9% | — | — |
ROA | 2.5% | — | — |
Current Ratio | $1.135 | — | — |
Debt to Equity | $6.91 | — | — |
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LMT reported Q1 FY2026 revenue of $18.02B, up just 0.3% YoY, while net income fell 13.1% to $1.49B and diluted EPS dropped 11.5% to $6.44. The quarter was marked by rising costs and a dramatic 84.4% decline in operating cash flow to $220M.
Profitability declined primarily because cost of revenue rose 1.9% to $15.94B while revenue grew only 0.3%, compressing gross margin from 12.9% to 11.5%. This cost pressure, combined with potentially higher interest expense on $20.53B in long-term debt, drove net income down 13.1% YoY.
No — LMT repurchased $0 in shares during Q1 FY2026, a complete reversal from the $750M in buybacks executed in Q1 FY2025. This suspension likely reflects the company's need to preserve cash given the sharp decline in operating cash flow to just $220M.
LMT's balance sheet shows total assets of $59.2B and stockholders' equity of $7.49B, but the debt-to-equity ratio is elevated at 6.91x with long-term debt of $20.53B. The current ratio of 1.14x provides only modest liquidity, and the near-collapse of operating cash flow to $220M raises near-term cash generation concerns.
The most significant risks evident from Q1 FY2026 data include the 84.4% collapse in operating cash flow, rising long-term debt (up 10% YoY to $20.53B), and meaningful margin compression with gross margin falling to 11.5% from 12.9%. These factors together suggest potential cost overruns, working capital stress, and reduced financial flexibility.